Market report about situation on October 2017

IS THE MARKET CATCHING ITS BREATH?

In October average apartment prices reduced the growth rate. The number of apartments offered for sale has gone down, month on month, since April. Potential buyers are showing a lot of interest, but the decisions are made slowly and carefully.

"The monthly average price increase in April was 1.5%, but is 0.1% for October. Since the beginning of 2017 the average real estate prices have risen by more than 6% - this was the price level that we predicted to expect only in the end of 2017. Continuing supply reduction in the future will stimulate price increase, but there are no signs of a property market “bubble”, because average standard type apartments price is around 52.7% lower than historic property prices maximum”, BALSTS CEO, Aigars Zarins, comments on these trends.

&nbsp In October compared to the previous month there were 2% fewer apartments on offer in the suburbs. This number has now been declining already for the sixth month. It is observed that the current smallest number of offers are in suburbs with the lowest prices - in Bolderaja and Vecmilgravis. This indicates that apartment owners are not in a hurry and they are not forced to sell their properties at such a low price level. Owners are willing to wait for further price increase.

October 2017 the average for Riga standard type apartments price range has reached 766 EUR/m2. The highest apartment price remained in Teika, where the average price stands at 895 EUR/m2 position, but the lowest price remained in Bolderaja – 541 EUR/m2. Riga apartments price drop has been observed only in new projects, while a minimal price increases from 0.14 – 0.4% were observed in most of the secondary market. BALSTS index increased by one point and reached 179 points.

&nbsp Activity within the new project apartment segment, which is orientated to the local buyer, has slightly increased. This increase is based on more accessible lending from banks and as well as the fact that a new apartment purchase mortgage loan monthly fee is less than apartment rent. However, it can be seen that people make their decisions about real estate purchase and investments slowly and carefully.

&nbsp Demand for rental apartments in the center of Riga still exceeds supply. This allows the rental rate to hold at the current level and even increase slightly. Apartments in the center of the capital city are offered from 5-8 EUR/m2. If the apartment is located in the historical center and with very good technical condition, then from 10-13 EUR/m2.